Top heavy

The wealth of 'high net worth individuals' (HNWIs) around the world rose 6 percent to $27 trillion in 2000, according to The World Wealth Report 2001. HNWIs are those people with investable assets of at least $1 million, excluding real estate

The combined wealth of the world's HNWIs has grown more than threefold, some 375 percent, since 1986

The number of HNWIs in Europe grew 6 percent to 2.3 million in 2000, the list growth in number of new wealthy individuals reported in any region in the world.

It's pretty hard to come up with good things to say about New Labour. One of the very few is that it has helped to bring the issue of equality back onto the political agenda. The Treasury under Gordon Brown is committed to pursuing a policy whose aim is 'opportunities for all'.

The funny thing about this is that, in reality, inequality has grown under Tony Blair. Back in April I debated with Anthony Giddens, chief ideologue of the Blairite Third Way, and he dismissed this claim, declaring that assertions to this effect were based on out of date information. The very next day it was reported that, according to the Office for National Statistics, in 1999-2000 'the Gini coefficient--a complicated mathematical formula used to measure inequality--shows that the gap in incomes between rich and poor has increased to 40, on a scale where zero represents universal equality of income. In 1998-99, that figure was 39--itself a new peak since 1991--and 38 in 1997-98, Labour's first year in office' (Guardian, 18 April 2001).

Inequality is thus higher than it was under John Major, despite Blair and Brown's commitment to reducing it. How do we explain this apparent paradox? A recent episode involving a discussion paper from the Performance and Innovation Unit (PIU) of the Cabinet Office may help us to solve this puzzle. This rather obscure body is headed by Geoff Mulgan, an important Downing Street adviser. Mulgan, once a contributor to Marxism Today and head of the Demos think tank, is what passes for a leading New Labour intellectual.

The paper, by Stephen Aldridge, the PIU's chief economist, addresses the problem of social mobility. This is an important issue for New Labour, since Blair has committed it to achieving a meritocracy. Aldridge defines a meritocracy as 'a society in which the most able and committed people can succeed in attaining the most desirable, responsible and well rewarded positions ...the features of such a society would include high rates of social mobility and the absence of any association between class origins and destinations'.

Meritocracy is not the same as social equality. As Aldridge points out, 'a meritocracy could be characterised by significant inequalities', but access to unequal positions would be on the basis of individual talent and effort. Meritocracy is essentially a bourgeois ideal.

It had a critical edge when directed at aristocratic societies such as pre-revolutionary France, where a person's social position depended very largely on the estate into which he or she was born. But it can easily become an apologia for 'dynamic' capitalists. The French Third Republic, for example, founded on the crushing of the Paris Commune of 1871, adopted the slogan of 'careers open to talents'.

Marx tacitly attacked the ideal of meritocracy in the 'Critique of the Gotha Programme' (1875), when he said that rewarding people according to the productive effort they put in 'tacitly recognises the unequal individual endowment and thus productive capacity of workers as natural privileges'. This idea was developed further by the egalitarian liberal philosopher John Rawls, who argued in A Theory of Justice (1971) that 'no one deserves his greater natural capacity nor merits a more favourable starting point in society'.

The Paris Commune was crushed

Short range mobility

Talent is a matter of what another egalitarian liberal, Ronald Dworkin, calls brute luck--the genes one happens to inherit and the social environment in which one is brought up. Genuine equality would involve providing each person with the resources that he or she needs to develop his or her powers as fully as possible, whatever these powers may be.

But though meritocracy is a superficial ideal, using it can help reveal just how unequal a society Britain has become. Thus Aldridge cites evidence which shows that 'there is a great deal of income and earnings mobility' that is, a lot of people move to better or worse paid jobs--'but much of this is short-range'. People may move from low paid positions to slightly better paid ones, but no further.

Moreover, 'earnings mobility in Britain has declined over the past 20-25 years', and 'poverty is more persistent in Britain than in, say, Germany'. Many people are stuck in 'a low pay/no pay cycle', a vicious circle where the low paid are more likely to experience unemployment and 'the unemployed are most likely to enter low paid jobs'.

All this has taken place against the background of growing income inequality: 'Between 1979 and 1998-99, the real incomes of those in the bottom decile [tenth] of the income distribution rose by 6 percent in real terms, whereas the real incomes of those in the top 10 percent rose by 82 percent. Mean incomes rose by 55 percent (also in real terms).'

Aldridge cites the extensive studies of social mobility mainly by John Goldthorpe and other sociologists based at Nuffield College, Oxford. These distinguish between absolute and relative social mobility. Absolute mobility is simply people changing positions in the occupational structure. Because the proportion of manual jobs has sharply fallen during the 20th century there has been a great deal of absolute social mobility (though interestingly this seems to have trailed off at the end of the 1970s).

This mobility has involved people from manual working class backgrounds moving into white collar jobs. This represents upward mobility only if you take the view that most white collar employees are middle class (or as Goldthorpe prefers to call it 'service class'). Marxists deny this, arguing that a person's class position depends on their place in the relations of production rather than on whether they work in a factory or a mine as opposed to an office or a call centre.

By contrast, relative social mobility, as Aldridge puts it, 'is concerned with the chances people from different backgrounds have of attaining different social positions'. Goldthorpe and his collaborators 'find no evidence of a statistically significant change in relative social mobility in the later decades of the 20th century, particularly in the case of men'.

Privileges

An earlier study by Goldthorpe of men born between 1907 and 1948 had found that in the mid-20th century 'the chance of men of working class origins being found in service class rather than working class positions ...worsened relative to the chances of men of both service class and of intermediate class origins being found in service class rather than working class positions'. Opportunities have remained rigidly unequal in modern Britain, despite the social reforms of the postwar Labour government and the brutal shake-up of British capitalism under Mrs Thatcher.

Moreover, these entrenched inequalities of opportunity are not confined to Britain. According to Aldridge, 'relative rates of social mobility exhibit a very high degree of similarity between countries and over time within particular countries. Such differences as exist are modest. Claims of national "exceptionalism"--that the US is a distinctively "open" or "fluid" society or that England is unusually "sclerotic"--are not supported by the evidence (both countries in fact having very similar patterns of relative social mobility).'

Obviously, how one addresses these inequalities depends on one's view of their causes. Among other things, Aldridge highlights the capacity of those at the top to pass on their privileges to their children. In a genuinely meritocratic society one would expect there to be downward as well as upward mobility. In other words, the less talented children of those at the top would sink in the social structure, creating openings for the able offspring of the lower classes.

But this is precisely what did not happen in 20th century Britain. Aldridge cites studies which show that 'there has been declining downward social mobility amongst the highest social classes for most of the past century ...whilst the barriers against bright working class children succeeding are quite low, the safeguards against failure enjoyed by dull middle class children are quite strong.'

Underlying this, Aldridge suggests, is the accumulated capital of middle class families. This capital does not just consist of money. Pierre Bourdieu has pointed to the importance of what he calls 'cultural capital' the in-built advantages that middle class children get from being brought up in households that give them access to the dominant culture from their earliest years, and therefore also a competitive edge in supposedly 'open' institutions such as comprehensive schools and universities.

Meanwhile, the so called public schools have changed their role, concentrating now on preparing their pupils for the exams on which access to elite universities has come to depend. According to Anthony Heath and Sin Yi Cheung, 'the independent schools have now largely adapted to the "credentialised" regime operated by universities, and now ensure that their pupils, who can no longer rely on connections to secure entry to privileged universities, acquire the A level grades necessary.'

Aldridge distinguishes between two possible government policies aimed at changing this situation. The first, intended to promote 'a weak form of meritocracy', would be concerned with increasing upward social mobility. Achieving 'a strong form of meritocracy' would require going further and adopting measures 'which seek positively to reduce barriers to downward social mobility for dull middle class children'. These could include:

Reducing the weight given to geographical catchment area as a determinant of access to the best state schools (to counteract the scope for middle class parents to buy a good education for their children by moving to the right area)

'higher rates of investment income and wealth

'higher rates of income tax; and

'abolition of inheritance'.

Tony Blair and Alastair Campbell must have had a joint heart attack when details of Aldridge's paper, including these proposals, were reported on the front page of the Guardian on 27 April. Increasing income and investment tax, and abolishing inheritance are hardly calculated to appeal to the Daily Mail reading Tory voters on which they have targeted New Labour's election campaign.

The very next day the Financial Times carried a report headlined 'Report on Social Equality Disowned by Blair'. A Downing Street spokesman explained that the paper 'represents the views of an individual working in the Performance and Innovation Unit. It is not government policy.' Obviously not, but Aldridge's paper was presented to a seminar in March chaired by Mulgan and attended by Giddens, Goldthorpe, various other leading academics, and civil servants and advisers representing major Whitehall departments. It was more than a private folly.

Redistribution of wealth

The affair illustrates the deep contradiction facing New Labour. Meritocracy is an unattractive and superficial ideal. If seriously implemented, it could easily lead to 'a winner take all society' in which the talented grabbed everything. In The Rise of the Meritocracy (1958) Michael Young imagined a meritocratic society whose tensions exploded in revolution.

But achieving even a meritocracy would require a large scale redistribution of wealth and income, and determined attacks on privilege. Pursuing such a policy is clearly unimaginable to a government headed by Tony Blair and Gordon Brown, as is indicated by its election commitment not to increase the basic or higher rates of income tax.

This means that any increases in public spending will be funded by raising regressive indirect taxes like VAT that weigh more heavily on the poor. As it is, according to the Office for National Statistics, the poorest fifth of households typically pay 41.4 percent of their income in tax compared to 36.5 percent for the richest fifth. Moreover, the proportion of income paid in tax has risen for the poorest 80 percent of households since 1997-98 and fallen for the richest fifth (Guardian, 18 April 2001).

Achieving real equality would involve going further even than Aldridge suggests. The engine increasing the gap between rich and poor, both in Britain and other advanced capitalist countries, and on a world scale, has been driven by the harsh neoliberal restructuring of the global economy over the past 20 years. Removing the constraints on competitive accumulation and profit has allowed the bosses both to increase their own material rewards and to drive down the wages of many workers. Many others have simply been left to rot in poverty.

Challenging this will mean more that redistributing income and wealth. It will require taking the productive resources of the planet away from the handful of multinational corporations that currently control them, and redirecting their use according to a different social logic from that of competitive accumulation. But that is a change quite undreamt of in New Labour's philosophy.